In this round of recent regulatory news, China released new rules to rein in currency speculation, ICBC kicked off its renminbi clearing service in Singapore, Thailand plans to curtail capital inflows by imposing controls on foreign bond investors and Malaysia launches its first online platform to trade unlisted securities.

The National Association of Financial Market Institutional Investors (Nafmii) unveiled new rules on May 20 that requires underwriters selling short- and medium-length corporate bonds to set prices that are close to those on notes that currently trade in the secondary markets. The rules also ban investors from profiting by buying bonds from underwriters at prices not available to typical retail investors.

Verification checks on enterprises applying to issue corporate bonds will be carried out to prevent systematic and regional risks to bonds markets. The National Development and Reform Commission (NDRC) confirmed the move in a circular released on May 23. The checks will cover financial data of the applicants, their debt-paying ability and debt history as well as their credit rating.

The State Administration of Foreign Exchange (Safe) issued new regulations effective May 13 on the administration of funds for foreign direct investment (FDI) by overseas investors. The abolishment of the 24 regulations, including rules on renminbi reinvestment by foreign companies, simplifies and standardises the rules for the administration of FDI funds.

China has released new rules to curb currency speculation amid signs that hot money inflows have helped push the renminbi to a series of record highs in recent weeks. The rules tighten limits on long renminbi positions that banks can hold for their own accounts and aim to discourage firms from using dollar loans as a means to speculate on the Chinese currency’s gains. Regulators will also increase scrutiny on exporters who channel money into the country disguised as trade payments, according to the announcement from Safe.

Hong Kong

The Hong Kong Mercantile Exchange (HKMEx) announced May 18 it has decided to voluntarily surrender the authorisation to provide automated trading services (ATS) granted by the Securities and Futures Commission (SFC). With immediate effect, no new orders may be placed and all open positions will be financially settled at the settlement priceSettlement price - The last price paid for a commodity on any trading day. The exchange clearinghouse determines a firm’s net gains or losses, margin requirements, and the next day’s price limits, based on each futures and options contract settlement price. If there is a closing range of prices, the settlement price is determined by averaging those prices. Also referred to as settle or closing price. determined by HKMEx and its designated clearing houseClearinghouse - An independent house settles trades acting as a guarantor for all trades cleared by it. The clearinghouse is responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery, and reporting trading data. .

India

The Reserve Bank of India (RBI) is likely to extend the deadline on applications for new banking licences by a month or two. Previously, the central bank had said the deadline for these would be July 1. Several private companies had sought clarifications from RBI on the new licensing norms, released in February. RBI received about 400 queries regarding the final guidelines.

From June 1, foreign investors will have to pay 5% withholding tax on interest earned on rupee-denominated long-term infrastructure bonds issued by Indian companies and government securities, said the Ministry of Finance. Earlier, the rate was 20%. The finance ministry notified norms in this regard on May 21. The new norms will be applicable for interest earned by foreign institutional investors and qualified foreign investors between June 1, 2013 and May 31, 2015.

On May 13, market regulator Securities and Exchange Board of India (Sebi) extended the deadline for listed companies to comply with norms that bar employee benefit schemes and trusts from buying shares of their own firms from the secondary market, to December 31. Sebi has also provided clarification on applicability of these norms in addition directing companies to make additional disclosures in this regard. The earlier deadline for these norms, aimed at curbing manipulative trading in shares of companies, was till June 30 this year.

Japan

The Bank of Japan (BoJ) plans to increase the number of days per month that it buys domestic sovereign debt from eight in May to 10 or more in June and reduce the amount of each offer in its latest attempt to mitigate market turbulence.

Malaysia

A proposed framework for an unlisted market has been shared by Securities Commission Malaysia (SC). It would be the country’s first online platform to trade unlisted securities and alternative investment products. Currently under a conceptual framework, the online trading platform is being developed in collaboration with key stakeholders, including government agencies and the private sector.

Philippines

The Bangko Sentral ng Pilipinas (BSP) has laid out a new rule on the release of local borrowings to state firms, agencies and local government units. In the new circular, the central bank warned banks against releasing partial or full amounts of lending in pesos to these entities without informing them of how the funds may affect money supply and inflation. The opinion, required under RA 7653 details implications to money supply, balance of payments and inflation of government debt.

Singapore

The Singapore Branch of the Industrial and Commercial Bank of China (ICBC) kicked off its RMB clearing service in Singapore on May 27, marking an important step in Singapore’s development as an offshore renminbi center. The Singapore branch cleared 53 transactions worth a total of Rmb1.61 billion (US$260 million), with 23 out of the 49 participating banks using the clearing service.

The Monetary Authority of Singapore (MAS) mentioned in a press release on May 14 on their website that Singapore is strengthening its framework for international cooperation to combat cross-border tax offences. This follows a comprehensive review of the current Exchange of Information (EOI) framework.

On May 2, the MAS released a consultation paper on the proposed regulatory requirements for participating banks and merchant banks in Singapore to conduct foreign exchange conversion in China via the renminbi clearing bank in Singapore.

Taiwan

The Financial Supervisory Commission (FSC) issued an order on May 16 relaxing restrictions on investment by insurance firms in domestic renminbi-denominated deposits – including those in offshore banking units – and bonds. The regulator said that insurers making such investments are permitted to deposit only up to 3% of their usable funds in the form of foreign currency deposits in a single bank.

Thailand

On May 7, local press reported that the Bank of Thailand (BoT) has submitted a plan to the Ministry of Finance (MoF) with suggestions on how best to slow capital inflows. Finance minister Kittiratt Na-Ranong said the BoT plans to introduce a lock-in period and a fee for foreign bond investors.

Vietnam

The State Bank of Vietnam (SBV) officially announced on May 28 the delay of the application of stricter regulations on classifying and making provisions for bad debts by a year until June 1, 2014. The circular, previously scheduled to come into force from June 1 this year, requires businesses to set aside more money to safeguard against non-performing loans. The new regulations also ask banks to make more risk provisions for credit grants, including credit card debts, investment in unlisted corporate bonds and deposits in domestic and foreign banks, besides normal lending.

The prime minister as agreed to regulations on the setting up of an asset management company to address nearly US$5 billion of non-performing loans and promote credit growth in the banking system. Under the decree, which will take effect on July 9, the asset management company would be wholly state-owned, managed and supervised by the SBV. The company would have an initial charter capital of VND500 billion (US$24 million).